Brent is currently down 3% at $33.62 a barrel while West Texas Intermediate – the US benchmark – is 4% lower at $32.03. Jasper Lawler at CMC Markets said:

Oil prices turned lower after the Iranian oil minister’s colourful description of the output freeze between Russia and Saudi Arabia as “ridiculous.” Iran and its plans to ramp up output after the lifting of sanctions is proving a thorn in the side of other producing counties which appear to be reaching consensus that production should stay at current levels. Tensions are clearly rising in the cartel as the Saudi oil minister reposted that “not all the countries will freeze. The ones that count will.”

Updated at 4.13pm GMT

3.39pm GMT

The day’s confidence figures show how fragile sentiment is at the moment, says analyst Connor Campbell at Spreadex:

Whilst the [US] existing home sales figure actually saw a mild increase month-on-month, from 5.45 million to 5.47 million, more notable was the sharp decline in the CB consumer confidence number.

Coming in at 92.2 against the 97.4 last month the figure, like this morning’s year-low German Ifo business climate data, highlights just how entrenched the market’s current fears are, despite the sporadic surges that have taken the global indices to a variety of recent highs. There was to be no such surge this afternoon, however, the Dow Jones dropping over 100 in light of that literal knock to the index’s confidence.

Over in the UK the FTSE fell past its earlier lows as the afternoon progressed, declining around 50 points to trickle underneath the 6000 mark following the weak US open, a drop exacerbated by Brent Crude slipping under $34 per barrel once again.

3.24pm GMT

LSE-Deutsche Börse deal faces “a number of challenges”

Back with the London Stock Exchange, and analysts at Numis point to a number of problems facing its proposed merger with Deutsche Börse:

This represents the third time the LSE and DB have attempted to merge, first in 2000 then in 2004. Although no details were given, a merger is expected to provide enhanced growth, significant customer benefits as well as substantial revenue and cost synergies.

However, we see a number of challenges in completing this deal, namely:

(1) the competition authority is likely to ask a number of questions as it would create a dominant player in exchanges and clearing in Europe – the EC blocked a similar deal between Deutsche Börse and NYSE Euronext in 2012 citing competition concerns;

(2) both have differing views on how to structure their respective clearing businesses – LSE backs open access (i.e. trading and clearing can occur on different platforms) whereas DB does not;

(3) national pride – would UK politicians be happy with the main UK exchange being owned by a foreign entity.

So whilst we see the obvious benefits from such a deal (namely cost and revenue synergies), we remain mindful of the challenges that would need to be overcome for it to complete.

3.16pm GMT

The Richmond manufacturing index has also disappointed, coming in at -4 compared to the 2 which analysts had been looking for.

However US existing home sales have beaten expectations, up 0.4% in January compared to a forecast fall of 2.5%.

Wall Street opens lower

Meanwhile US stock markets have opened lower, in line with the dips on European exchanges.

The Dow Jones Industrial Average is down 40 points or 0.2% after another fall in oil prices – West Texas Intermediate is around 2% lower after a report Iran’s oil minister called the proposed output freeze ridiculous. At the open the S&P 500 is 0.3% lower and Nasdaq down 0.4%, ahead of the latest US consumer confidence figures.

Back in Europe the FTSE 100 is currently down 22 points or 0.3%, but would be another 4 points or so lower if not for the 16% jump in the shares of the London Stock Exchange.

2.38pm GMT

It was not always so friendly between the LSE and Deutsche Börse:

Ah deja vu. And here’s the note accidentally sent by LSE in 2000. Blame “german intransigence” if merger aborted. pic.twitter.com/lLq15hsWA7

The London Stock Exchange is in talks to merge with Germany’s Deutsche Börse in a deal that would seal an alliance first discussed at the turn of the millennium.

The LSE confirmed on Tuesday it was in detailed discussions with its German rival about an all-share merger. Under the proposed structure, Deutsche Börse shareholders would own 54.4% of the combined company and LSE shareholders would hold 45.6%.

The UK exchange said: “The boards believe that the potential merger would represent a compelling opportunity for both companies to strengthen each other in an industry-defining combination, creating a leading European-based global markets infrastructure group.”

David Cheetham of City trading firm XTB.comsays a merger between the LSE and Deutsche Borse would create one of the world’s biggest financial trading platforms.

“Shares in London Stock Exchange Group have soared by over 17% in the past hour as news that they’re in talks with Deutsche Boerse have been confirmed. If the deal were to go ahead it would create a clear market leader for European and one of the largest exchanges in the world for trading and risk managing derivatives.

The timing of this development appears coincidental as the possibility of a Brexit has become increased in recent days now that a referendum date has been set and Boris has joined the Out campaign.”

2.18pm GMT

The news that Britain’s stock exchange could soon merge with its German rival has startled the City, especially given the upcoming EU vote.

LSE confirms merger talks!

Further to the recent movement in LSE’s share price, the Board of LSE and the Management Board of Deutsche Börse confirm that they are in detailed discussions about a potential merger of equals of the two businesses.

This would create “a leading European-based global markets infrastructure group”, it claims, adding:

The combination of LSE and Deutsche Boerse’s complementary growth strategies, products, services and geographic footprint would be expected to deliver an enhanced ability to provide a full service offering to customers on a global basis.

Under the plan, Deutsche Börse shareholders would hold 54.4% of the new company, while LSE shareholders would hold 45.6%.

The LSE’s shares are now up 17%, valuing the group at almost £9.5bn.

Updated at 2.24pm GMT

1.41pm GMT

Deutsche Börse shares have also jumped, by around 3%, following the reports of merger talks with Britain’s LSE.

And Euronext, another stock market operator, has seen its shares rally by 4%. Investors may be anticipating a bidding war.

The email indicates that a small group of senior staff are to examine the effect of a Brexit under the authority of Sir Jon Cunliffe, who as deputy director for financial stability has responsibility for monitoring the risk of another market crash.

Cunliffe also sits on the board of the City regulator, the Prudential Regulatory Authority.

James Talbot, the head of the monetary assessment and strategy division, is involved in Project Bookend, drawing on his past work as an adviser on European economic policy.

Updated at 12.19pm GMT

11.52am GMT

Carney: Brexit contingency planning is underway

The Bank of England is engaged in contingency planning for the EU referendum, Mark Carney tells the Treasury committee.

He also reveals that the Prudential Regulation Authority is keeping abreast of the contingency plans that UK banks are making ahead of the June 23 vote.

Further details will discussed on March 8, when the governor testifies to the committee specifically about the referendum.

The governor reiterates that investors have been buying downside protection to protect themselves against falls against the pound, especially against the US dollar [rather than the euro, because it could also suffer if Britain leaves the EU].

Governor Carney concludes:

It is safe to say that an element of referendum premium has come into sterling.

Updated at 12.10pm GMT

11.42am GMT

Rachel Reeves MP reminds Carney that the latest Inflation Report states that interest rates are likely to rise, not fall. How can he can so confident?

Mark Carney gives a rather dovish answer, says the Bank expects interest rates to rise, gradually, over the forecast horizon.

But of course, if risks increased and the global economy deteriorated, that would have implications.

So do you expect the next move to be up, not down?

Carney replies that the UK domestic economy is positive, but that must be balanced with disappointing signs from abroad. We must weigh the two up, and we’re not taking a policy decision today.

Fascinating. At TSC Rachel Reeves asks Carney whether he still thinks next move will be up rather than down. He stonewalls. Big shift… 1/2

Mark Carney says it is primarily due to the macro picture. He cites ‘mildly disappointing’ data and uncertainty about the policy stance in emerging and advanced economies.

That caused a “renewed appreciation” that we are in an environment of low nominal growth — a difficult environment for banks.

On top of that, Carney adds, there are some concerns in investing circles about the impact of negative interest rates on bank profitability.

11.07am GMT

BoE policymaker: Brexit fears could hurt real economy

Dr Gertjan VleighePhotograph: Dr Gertjan Vlieghe,

Dr Gertjan Vlieghe, a member of the Monetary Policy Committee, now warns MPs that the uncertainty over the In-Out EU referendum could hurt the UK economy.

Asked about the impact of the weaker pound, he says that on its own, a weaker currency should boost inflation and growth. But the current situation is more complex, given the possibility of Brexit .

Vlieghe tells the Treasury Committee that:

We think the exchange rate is falling because of increased uncertainty about what’s going to happen in the period leading up to, or the period following, the referendum.

It is possible at some point that increased uncertainty from foreign exchange investors also ends up manifesting itself in increased uncertainty by households and businesses which may, or may not, delay or reduce their spending.

So far we haven’t seen very clear evidence of that, but we are watching very carefully.

The committee is keen to find out whether the Bank of England will make a profit or a loss on its bond-buying quantitative easing programme.

After all, the richest households have certainly benefitted, because QE drives up asset prices. And we know who holds them…..

10.47am GMT

Tyrie then turns to Britain’s banks – is Carney confident that they are robust enough to rise out another crisis?

He points out that Sir John Vickers, who conducted a major inquiry into the UK financial sector after the 2008 crisis, has warned that the banks haven’t gone far enough. What’s your view, governor?

Carney insists that the UK banks have met the new capital requirements.

So why have bank shares fallen so sharply? Carney blames worries about profitability, not solvency:

Since the start of the year bank stocks have been under pressure. There are a variety of causes of that but what is not a cause, what it does not indicate in my view is concerns about the resilience of the institutions.

“The fundamental concerns are about the returns of the institutions.”

10.38am GMT

Carney.Photograph: Parliament TV

10.37am GMT

Carney: EU referendum is driving demand for sterling protection

Andrew Tyrie does have one question on the EU referendum:

Q: Has the Bank modelled the impact on sterling if the Out campaign win, given what’s been going on in the markets in recent days?

Mark Carney says the bank will treat the June 23rd referendum “exactly like we treat any other political event”.

That means the Bank will monitor developments in markets and confidence, and feed those changes into its models.

The Bank won’t take any judgements about who will win, or assess the consequences of a leave vote.

Carney in brick wall approach to #Brexit treating it as any other political event

Expectations have taken another sharp hit from recent market turmoil, the adverse impact of low oil prices and renewed concerns about a slowing of the Chinese economy, dropping to 98.8 in February, from 102.3 in January.

The pound is hovering around $1.413 this morning, having hit a seven-year low of $1.4057 yesterday.

FXTM research analyst Lukman Otunuga believes the pound could fall further in the run-up to June’s vote, and take the euro with it.

The growing speculation that a Brexit may spillover to the Eurozone and threaten the future of the European Union has already encouraged bearish investors to attack the Euro across the global currency markets.

8.40am GMT

Standard Chartered shares slide after $1.5bn loss

Shares in Standard Chartered are sliding sharply after it posted its first annual loss since 1989.

The bank has lost $1.5bn, and warned that it faces a “broad range of challenges and uncertainties….notably China and commodities”.

The loss is partly due to a $1.8bn restructuring charge as Standard Chartered tries to address the slowdown in emerging markets (the bank is a big player in Asia).

The City aren’t impressed — shares slumped by 11% as investors digested the details. They’re currently down 6%. More to follow later…

It doesn’t help that the mining sector got its own unwelcome surprise; whilst it was expected that BHP Billiton would post its first half year loss in 16 years (coming in £4 billion in the red) analysts were still looking for a 31p dividend.

Instead BHP slashed its interim payout by 75% to 16p, whilst also sacrificing its progressive dividend policy in order to protect its credit rating. The company’s subsequent 3.5% slide helped ensure its mining peers started the day at a loss, dragging the FTSE down by nearly 50 points after the bell.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.2%, after earlier rising 0.4% to its highest level since January 8. Japan’s Nikkei erased morning gains to close down 0.4%.

Korea’s Kospi, which started the day higher, and Australia’s ASX 200, which opened little changed from Monday’s three-week high close, both ended the day with losses.

Chinese stocks , which opened little changed, were last trading down almost 1%.

Oil markets jumped as much as 7% on Monday as speculation about falling U.S. shale output fed the notion that crude prices may be bottoming after their 20-month collapse. But they retreated on Tuesday on concern that any cuts to U.S. production may be countered by rising output from Iran.

U.S. crude futures fell 1.9%, and the international benchmark Brent slid 1.6% on Tuesday.

Global rally struggled to extend into Asian hours, although gains in energy and material stocks capped the extent of losses. #DJ

Bank of England governor Mark Carney should be quizzed about the European vote, when he testifies to MPs at 10am GMT on the Bank’s latest inflation report. Deputy governor Minouche Shafik, and fellow interest rate-setters Martin Weale and Gertjan Vlieghe should be providing support.

On the economics front, new German trade data is being released this morning. We also get the latest IFO measure of business confidence in the eurozone’s largest economy, at 9am GMT.

Standard Chartered, the bank with a big exposure to emerging markets, is reporting results at 8.15am.

And in the afternoon, the latest US consumer confidence figure are released. They’ll show how much damage has been caused by the stock market turmoil earlier this year.